AIRLINE MARKETING PLAN

A Project By
ALI MEHMOOD (12003001027)
AHSAN NISAR (12003001024)

Supervisor: Capt; IMRAN SAEED

A Research Project
Submitted to the Aviation Department
In Partial Fulfillment of the Requirement of the
Bachelor of Science in Aviation Management Degree

University of Management & Technology

Year 2012-2016

Feel free to fly

TABLE OF CONTENTS

Sr. no

Topic

Pg. no

Purpose and Mission

Executive Summary

Pre-launch Analysis

PESTEL Analysis

13

Competitors Analysis

16

PIA

16

Air blue

30

Tactical Portion
8

Target Market

38

Product

40

10

Place

41

11

Promotion

41

12

Price

41

13

Distribution

42

14

Financial Plan

43

15

Start-up Cost Assumption

ACKNOWLEDGEMENTS

44

Starting with the name of Allah Almighty, the Beneficial and Merciful.
At the start we were not able to understand that what we have to do and how we do. After that we
started our efforts and there we found some people who were standing in front of us to encourage
and lead us. I want to owe heartiest gratitude to them especially our respected teacher Sir
IMRAN SAEED, faculty members and colleagues . From their inspiration and courage we are
able to complete the project.
And we want to dedicate this project to our Parents and respected Teachers.

Introduction of Members

Ali Mehmood

Ali is a person with the believe to work beyond the shell therefor he join the university of
management and technology by selecting bachelors in aviation management so that he can
pursue his dream to travel the world and see the bigger picture. Ali has also been academically
proactive and has been awarded with dean merit award by the Office of Controller of
Examinations UMT. He then started during degree to research on the different projects regarding
the betterment of the aviation structure keeping in mind the international scenario.
Ali started his degree in 2012 and completed his internship in 2015. He then started working
with Gerrys Dnata and have a experience of working with different airlines i.e. EMIRATES,
TURKISH AIRLINE, AIRARABIA, MIHINLANKA etc. He realized that if you want to work
out of the box then start with changing internal environment of the aviation. As the final project
of the degree he chooses the topic Marketing plan of an Airline .He contacted with different
personnels of airports and the persons with aviation background. Behind this project he has

efforts that are appreciable. He has a dream now to serve his nation his country with whole heart
and to give his services to the betterment of the aviation industry structure of the Pakistan.

Ahsan Nisar

Ahsan Nisar a person with a passion to serve the nation as possible as he can. He also joined the
University Management and Technology for further his future studies. He selected BS Aviation
management to be an airport manager because airports are the engine of the economy and this
time aviation industry needs a new blood so that aviation industry could also contribute to the
GDP of the country. This was the reason behind selecting the group member Ali Mehmood as his
member for the final project of his bachelor degree.
He has a passion to serve the nation practically, with this purpose he and his group member
started to meet with people of aviation background. They contacted them through different
means and come up with maximum suggestion for the betterment of the future. The project is
totally based on the knowledge of their own about the aviation industry and the knowledge of
aviation personnels of Pakistan. He also gathered some projects related to aviation problems and
the related solutions provided by some respected persons of the aviation industry.

PURPOSE AND MISSION

Purpose and mission of airlines that are running their business on the study
of low cost is to provide customer services delivered with sense of warmth,
friendliness and giving them chance to travel at low fares.
The main reason of this marketing plan is to develop low cost airline shares
in the market while studying marketing strategies and planning. The task is started
by giving the overview of the company and having a greater look on the cities
Lahore, Karachi, Islamabad and other routes which are vacant or are less used by
the airline industries and what are the products that our low cost airline could
provide for the Pakistan airline market. The main reason for doing all this research
is to point out the ways where we can sell our product differently from the other
airlines and can take the competitive advantage our other airlines.
The report give us the image about the airline internal weakness and
strength by SWOT analysis which gives us information about the opportunities and
threats that airline has to face and also by having the good look on airline PESTAL
analysis we can find the external operating environment for the airline. Marketing
promotions while making advertisement will increase brand and product
awareness. Finally, it will give us the clear image about the marketing shares,
company internal and external situation and what are the plans for the future to
remain on the top of the table.

EXECUTIVE SUMMARY
We are group of two friends who have worked on the marketing project of
an airline. The main reason of this project is to realize the importance of marketing
in airline industry and what marketing can do to promote a business. We will
launch a new airline whose name will be LoCost (feel free to fly).
Our basic task and objective is to launch an airline in the current economic
condition. The airline we will launch will only caters the society of Pakistan which
are lower middle and middle. As Pakistan is suffering from terrorism and is in
worst condition of its life and people here are depressed.
We will provide cheap and healthy transport to all these depressed people.
The name of our airline will attract the customer and make a sense in their minds
that the airline is very cheap and it is the main reason why we choose such a name.
We will use simple marketing techniques to market our product and will not waste
money on other expensive techniques to market our product rather we will use
sponsorship technique i.e. will sponsor cultural events, sports etc. Our main
objective is to finish the fear among the people that the air travel is very expensive
and is only for rich people or the people of high standards.
We are using the strategy which is Cut the cost, earn the revenue. Due to
this strategy our in-flight luxuries are reduced which has greater effect on the cost.

The population of Pakistan is increasing day by day so we have decided to hit such
a segment of society which is greatly affected by the cost of air travels and the
society is lower middle and middle class because they do not think beyond basic
requirements like food, shelter and clothes. We will do something for the largest
part of society of Pakistan which is lower middle and middle class and let them
think that there is someone who care for them Feel Free to Fly.
We have done a lot of research and gather a lot of important information but
now we got to know the exact situation of Pakistan through PESTEL analysis and
business opportunities. We have learned that there is a lot of vacant space available
in the aviation industry to improve and unique ideas can insist investors to invest in
this industry. The idea of LoCost will bring revolution in the aviation industry and
our competitors will use our strategies to market their business.

PRE-LAUNCH ANALYSIS
SWOT ANALYSIS
Airline make study of swot analysis to identify its strength and weakness
from different opportunity and as well as it show external opportunity which are
present and threats about it..

STRENGHTS
Technological Skills
Our aircraft will be New and approved with latest
technology.

Economical Travel Facility

The fare on air tickets will be cheap
and economical e.g. fare from Lahore to Islamabad will be PKR 4000/=
Management Style
Our style of management will be autocratic to
prevent threats of labor union and other labor organizations.

Brand Name
The name of our airlines is LoCost Airlines due to which
customer is attracted towards it.

WEAKNESSES
Profit Margin
We are emphasizing on travel comfort not on profit and can
be weakness of our airline therefore the profit margin is too low.

Financial Resources
Lack of Capital is very big drawback due to which at the
time of need we will lose the confidence of our customer which is the biggest
threat to our airline.

Lack Of New Products/Facilities

we are running low cost airline
therefore we are not giving extra services and luxuries which our

competitors are giving therefore we will compensate it with our cheap

fares.
Food
We are not giving food and other stuffs in- flights.

Weak Brands
Our airline is new in the market due to which the
value of our brand is too low just like a new born child.

OPPORTUNITIES
Developing Customers Taste
Our main focus is to make the lower middle and middle class people to fly
and make their dreams come true with cheap fares.

New Distribution Channels

We will concentrate on One level channel as the time passes and company
progresses.

Public Relationships
As customer relationship is the basic need of any
business therefore we will develop a long term and good relationship with our
customers.

THREATS
Decline In Leisure Travel Due To Economy
As we are hitting the part
of society which is lower middle and middle class and economic situation of
Pakistan is changing day by day therefore people might not prefer to travel due to
increase daily life expenses .

Terrorist Activities
Airline industry is badly affected by increase in terrorist
activities.

Lose Of Key Employees

Main threat to our airline is our key employee
leave our airline and join some other airline and not accepting the contract.

Increase In Competitors
competitors are always threat to any business so
any other airline can be threat to our business if it is providing similar facilities like
ours.

Accidents/Air Crashes
Accident or air crashes can cause the affect that
people might not travel in aircrafts as happen when there was a crash of air blue
few years ago due to which travel from domestic sector was reduced.

PESTEL or External Environmental Analysis

To identify opportunities at macro level airline use pestel analysis and have a
greater look of the environment.

Political Environment
As long as there is political stable government in Pakistan investor will
invest in the business and there is more chance to earn more profit because if there
is stable government in any country then rules or regulation remain same in any
aspect and it make a stable environment as the government of N league is going to
complete its 5 years so it is the best time to launch a business as the environment is
stable.
The political situation of Pakistan
The business strategies, marketing strategies and financial situation can be
affected by the change in taxation policies as Pakistan is a politically unstable
country and taxation policies change on regular basis which can be greatest threat
to any business and in such scenario it is difficult to run a business. Government
give subsidies to relief general public but subsidies varies from product to product
as the product is consumed more by general public then it will have more tax on it.
Government of Pakistan give a sense of protection to every business and
help to formulate strategy on long term basis which is a healthy sign for any new
investor and is easy to run a new business.

The Economical Environment

Economic environment of any country is divided in to two parts first part
depend on the customers that what is the living standard of the people which are
living in any country and second part is role of banks in remolding the economic
setup of any country.
The study of these two strategies is important to analyze the situation to run a
business.
The Economic Environment of Pakistan
The standard of living of most of people of Pakistan is mediocre there is
more lower middle and middle class society in Pakistan and most of people are
illiterate and live below poverty level. As the purchasing power of people of
Pakistan is very low therefore we are starting a low cost airline because people do
not afford luxury travel.
It is not difficult to set the price of the product if target market is known.
Both of these factor must remain in consideration to develop effective
strategy to launch the business..

Social and Ethical Environment

Social and ethical environment must be studied before start of any business
because it is the basic demand for any society to get respect because social and
ethical issues are sensitive and if disturb by any channel can prove disaster to any
business so these issues of any particular country or community must not be
challenged.
Social and Ethical Environment of Pakistan

Pakistan population is 20 crore out of which 98% people are Muslim and 2%
are minorities including Sikhs, Hindu and Christians. Now the product should
develop in accordance to social and religious believes because it will be unlawful
to develop product which is not acceptable by the majority.

Technological Environment
All the qualitative and quantitative aspect of business is affected by
technological environment. Technology of any particular kind can affect
production, distribution, marketing and human resource management (HRM).
Technological Environment of Pakistan
Pakistan has greater edge our third world countries such as SUDAN,
BANGLADESH, AFGANISTAN, etc. Pakistan possesses advance technology and
has a competitive edge over third world countries and is in better location to
successfully explore the better and existing opportunities.

Environmental Factors
Environmental factors are the most important thing to remember in mind
before starting any business because it includes the weather and climate changes.
Environmental Factors of Pakistan
Pakistan is a blessed country that possesses all four season and is least
affected by global warming and because of presence of all four-season it will in
short increase the tourism because factors are very favorable for travel and
transportation industry.

Legal Factors
Airline industry has to follow different laws i.e. they have to cross boundaries of
different countries, every country has its own laws therefore study of it is
neccessary .
Pakistan legal factors
Pakistan is a developing country with a high unemployment ratio because of
this factor people work hard and wanted to do overtime which in short result in
more production at less cost so therefore it is difficult to implement legal factors
and investors take benefit of it.

COMPETOTOR ANALYSIS
PIA (Pakistan International Airlines)

Target Markets of PIA

From the Demographic Segmentation, PIA targets those people who earn
their own or those people which are employees. Their description is given below:

Income Section

From income section of PIA include the rich people and those who are
having good earning.

Business point of view

From business point of view PIA hit to those person who are working inside
or outside the country and secondly people who are running their own business.
From the all geological section all those people are hit by PIA which are
living in Pakistan or living abroad.

Market section of PIA

Hajjs operation
All people travel by PIA who wants to perform this prayer in SAUDI
ARABIA and these all people are targeted by PIA.

Eids Occasion
When Eid occasions is going on than all the people from outside the country
and within the country travel to reach their homes.
New Years Occasion
On occasion of New Year people travel to different countries or with in
country to different cities or wanted to celebrate New Year with their families.

Faithfulness

There are different benefits for the people who use to travel on Pakistan
international airline. The benefits are for those people who travel a lot and get
discount on their tickets.

Psychographic segmentation
Community Class
The community Class includes the holiday maker, religious people and
Pakistani emigrants.

Holidaymakers
Pakistan possesses all four season and having beautiful cities like NARAN,
KAGHAN, GILGIT etc. therefore many people travel inside the country and also
travel outside the country.

Religious people
Those people who perform their prayers such as HAJJ in Saudia Arabia are
the people to which PIA look before.

Services
PIA provides different services i.e.
Economy class services
Business class services
First class services
The characteristics of services by PIA are given below:

Intangibility
Services can be intangible or tangible but services provided by PIA are
intangible. These services cannot be touched, smell, tested or heard before the
purchase. People will ask from different people who has travel before and it will
clear their minds.

Inseparability
Services are the things that are produce and consumed at the same time. A
person is a part of services if it is rendered by him.

Liable
The quality of services must remain 100% on to the demand because it is the
major thing which develop brand image and it should maintain properly time to
time i.e. seating capacity for passengers, meal for passengers. For this purpose PIA
invest large amount of money on training of its employees to earn customer
satisfaction.

Perish Ability
Services have no self life and they cannot store. When there are more
requirements of staff i.e. in HAJJ season it is difficult to maintain their services
because of large amount of customer.

Unique Feature Offer by PIA

Safety and reliability

Engineering facilities are best

Pilots are fully trained
National flag carrier

Pricing
A profit organization suffer from difficult task of setting prices for the
services they offer there are different ways to set the prices for the services that are
customer willing to pay for the services they want to enjoy while PIA set their
prices on one type of situation.

Domestic Routes
For domestic market prices are set on the basis of cost plus method. The PIA
management estimates the price by knowing what is the purpose behind the price
setting, is there more demand on the routes to which plan is flying, what is the cost
company is barring, what is the price set by our competitor and then finally price is
set.

Promotion
PIA is not good in this form of advertisement rather they use some T.V
commercials or newspaper to advertise when the season is not on peak while
agents use to play important role in promotion of PIA. Some tactics are given
below:
Umrah
There are more flights in this season for the people who want to perform
their prayers because of this completion increase and people get tickets on
discounted prices.
Boeing_777s is utilize on this route.

PIA Budget Flight

Budget Flight is run by PIA from different airports of Pakistan. Mostly B777 is
utilize on this route. PIA get its revenue by different tactics i.e. there is no checked

in baggage if u want to take your baggage with you then you have to pay for it and
secondly if there is no baggage it save time. Hand carry according to condition is
allow mostly 10 kg.

PIA cooperative price-Plan

If ticket books earlier then u get discount on tickets for domestic and
international flights.
Different discount in Business, Economy plus & Economy Classes.
Lower fares are provided in the lean travel period.
Those sectors on which revenue management is implemented there are
flexible fares for those flights.
Condition applies.

Fly Business Class With A Free Ticket

You get one ticket free if u buy three
Pay 50% for your companion by buying one ticket of own
For international rules offer is there

concession to Student
Students get 25% discount on domestic routes
By booking tickets from PIA BOOKING OFFICE you get 10% discount
Only for Economy Class passengers can enjoy this offer

Distribution Network
The key resource for PIA is its distribution system. PIA run its own
administration system.

Level of Channel
Two level of channel are used by PIA according to our opinion, which are
as follow.

Marketing passage
This is called the zero passage channel. PIA sell tickets direct from their
offices to customer which are located in different cities and make direct connection
with the customers.

One Level Channel

Travel agents are given access to reservation system and these travel agents
sell ticket by using PIA own reservation system from where they get data of flight
and vacant seats. There are 2 types of travel agents whose info is given below
IATA agencies
PIA has signed contract with IATA due to which different IATA agencies can
sell tickets of PIA by using its own reservation system. These agents get charge for
it.
For International sector it is 9%
For Domestic sector it is 5%

District Sector Agents

District sector agents are those which deals on those places where there is no
office of PIA reservation system those areas are cover by these agents. These
agents cannot give services to other airlines.

STRENGTHS & WEAKNESESS

Effectiveness
Leading Market Position
PIA has more than 40 aircrafts. PIA is trying to privatize the airline and is
going through the procedure of privatization. PIA has more than 14000 employees
and is 88% punctual and has 70 domestic destination and 34 international
destination with in 27 countries and it has sign a document of alliance with
EITHAD airways, TURKISH airline, THAI airways and CHINA SOUTHERN
which combine give 100 code shares and it has a market share of 48%. .

Brand Recognition
PIA is a national flag carrier of PAKISTAN and is known by every
individual living in the country. PIA stood number 1 in year 2009 due to its strong
brand image and customers were satisfied by the services offer by PIA. PIA can
strengthens its brand image and gives a company a scale advantage.

Superior Operating Structure

The position for low cost carrier is maintained by PIA. PIA always utilizes
latest technology. PIA use series of aircraft due to which cost is reduced. Use of
series of aircraft reduces cost as u do not need more engineer, more crew for single
type of aircraft and is easy to train people in less cost. Primary competitive
advantage of PIA is achieved by its superior operating structure.

Network Presence
70 destinations of domestic bases and 34 destinations of international sectors are
utilized by PIA.

Hub Airport at Karachi

Jinnah international airport which is present in Karachi is one of the biggest
airport of Pakistan and is always remain full with passengers. PIA hub is present on
this airport and flight operation department of PIA work 24 hour. The competitive
advantage to PIA is its strong presence on Jinnah international airport.

Effective Use of Technology

PIA has edge over competitors because PIA has latest fleet which are more
comfortable for long haul flights PIA use boeing777 and PIA has its own
simulation system where pilot get training. PIA has recently bought series of A310
for different domestic routes.

Deficiency
Formulation of Government Rules
PIA is not getting long term success because of its centralized system. It is
difficult to handle lengthy data due to which there is a chance to lose important
information and it also decrease motivation. Whenever government changes then
rules for PIA also changes.

High Dependence on Passenger Revenues

PIA gets its revenue from Passenger kilometer flow as well as from their
excess baggage. The net income for PIA is Rs 20.55 billion. PIA has 40 fleets and
its revenue is Rs 69.24 billion. Passengers are the basic target now for PIA early in
year 2009 PIA was involved in cargo services but now it has been shut down.

Debt
PIA has a significant amount of debt of Rs 3.2 billion annually which it is
paying in debt servicing. Debt can push PIA far away from the competitors which
are having lesser debt e.g. debt can give a sense to investors to not to invest in PIA.
PIA has its total liabilities stands Rs 288 billion which is one of the hardest things
for any business.

Reliance on Oil Prices

Every airlines revenue heavily depends on oil prices. Due to increase in oil
prices many airline around the world went bankrupt. Now a day there is 20%
decrease in oil prices but passengers are not getting any benefit from PIA fares for
KARACHI ISLAMABAD flights starts from Rs 7366. Many airline go under the
process of fuel hijacking so that they may have fuel when the prices go up and they
can enjoy the profit at less cost.

Financial Position
Final result is been shown on the following table which give us key financial
results for the end of the financial year.
Financial trends for the airline from 20092016.

Market Share of PIA

Domestic 51 %
International 28.16 %

High linkage to the remote areas of Pakistan

Using highly equipped engineering and state of art technology

Research and Development Capabilities

Research and Development Department of PIA work with marketing

department of PIA where it gets information about the market that how many
customers can be targeted and according to which they can by fleet by having fleet
planning. After that fleet planning contact with Finance Department to get
information about the funds if they have good money than they can buy new plane.
Board of director meeting held and they give permission to buy or hire the aircraft
according to need. Recently PIA has bought A310 to manage their fleet according
to their routes.

Future Competitive Threats

High Interest Rates
GDP of PAKISTAN is going down due to which people are losing their jobs
and there are no more jobs in the market and if this continues then people prefer to
travel cheap means such as bus and trains.

Strong Competition by Airblue

PIA is fighting with its rivals SHAHEEN and AIR BLUE airline due to
which it has to cut the ticket prices so that more customers can attract towards PIA.
PIA is following the policy just like SOUTHWEST airline is following that when
there is more demand than the ticket prices set to be higher and when demand is
less prices cut short so that customer attract towards the airline
.

Value of rupee
If the value of Pakistan rupees become strong in the international market than
PAKISTAN INTERNATIONAL AIRLINE will enjoy more profit as if it wants to
excel its business such as in UK market and if the value goes down then vice Versa
can happen.

Decline in Airline Industry

There are number of factors due to which people can hesitate to travel through
airplane i.e. the attack on world trade center on September 11 and other terrorist
activities can make people think to travel through other carrier.

Target Market Perception

The perception of PIA is negative in the mind of their customers as they do
not have second option so they fly with PIA and they are just satisfied. PIA over
utilize their fleet and E.U banned PIA because they use aircraft more than its life
and secondly crew of PIA is ill mannered.

AIR BLUE
Services
Span of services
Air blue provides services in two formats one is cargo and other one is
transport.
E-Ticketing
Air blue for first time in Pakistan provide electronic ticketing facilities to its
customer where its customer can book their seats through internet while they can
also postpone their trip by using internet. Electronic ticketing is very responsible
job where you need skillful employees who can handle this work and it also
increase cost for airline.
Product Attributes
Air blue provide services in different manner they provide in-flight
entertainment system and also remain punctual with its time and maintaining
services because Air blue do not want to lose its customer. Easiest way to book its

ticket through e ticketing. They focus to comfort its customer and for this they
have excellent caterer with the name exquisite cuisine.
Cargo Services
Air blue provide cargo service and shift more than 90,000 kgs of cargo daily.
Air blue has their online system to book cargo and provide pick and drop service
by adjusting its cost. Air blue main objective is to provide easy and best shipping
facilities to its customer.

Pricing
Premium Pricing
Fix of price is the main issue any business to sell its product if the price is
low people will think the product is mediocre while if u set prices high then it
show sign of excellent services. Air blue and PIA set its prices high and people
trust them and want to travel on them. In return Air blue provide excellent services
to its customer and make their money work.

Penetration
For any business penetration price is set to low to break the brand loyalty of
other business when u make a brand image then prices are set at high. Air blue
follow the same rule at first prices were set low then after making brand image
they set their prices high but never compromise on their services whether prices are
low or high of its product.

Skimming
In this version of price setting airline set their prices by seeing the flow of
customer when there is more demand prices set at higher and when there is less
demand prices set at lower same trick is follow by SOUTHWEST airline and Air
blue is playing with same trick. This type of setting of prices is only done when
you have a clear look of the market.

Promotion
When you want to have more grip on market then u advertise the product and
follow different rules of promotion which are shown in image.

Air blue focus on 2 types of promotion which is as follow:

1. Publicizing
When you want to promote any business then you have to have clear look on its
marketing and for marketing advertising is the basic way. You can advertise your

product by using media, email, T.V etc. air blue use telecommunication network
for its advertising and also the newspaper such as JHANG, THE NEWS etc.
2.Sales Publicity
There are different type of Sales promotions i.e. refunds or markdown.
Refund Offer
Air blue full price refund of ticket if u cancel your ticket before two days and it
you cancel your ticket before 24 hour then a penalty of 1100pkr is deducted and if
u cancel your ticket on the same day then according two rules price is deducted
depend on the sector whether you flying for international or domestic sector.
Publicizing Specialties
For the purpose of advertisement Air blue give different toys to kids that travel on
their planes same trick as that followed by MCDONALDS and different useful
articles printed by its brand name to its customers.
Patronage Rewards
Air blue provide its customer with skyward member ship that if u travel through air
blue then u score some points egg if u have 12000 points on your skyward card
then u can enjoy a free ticket.

Distribution Network
In the study of 4p place is one of the important things from where you start
the business because when you have to efficiently and effectively excel your
business you need a network to target the audience.

Distribution Channels
When you want to sell your product to the target audience you need a
channel through which this process goes on. In case of air blue their distribution
channel is travel agent who sells its ticket to the target audience.

Level of channels

You need a channel which brings your product closer to selling as shown in image
and work like wholesaler. Air blue work on these channel and sell its tickets
directly to customer and as well as use services of travel agents
.
. Interceder Selling
Air blue is running its own business and sells its ticket directly to customer
and also through travel agents who work in between the line because travel agent
also sell tickets of other airline too so they are independent.

Number of Interceder

There are different types of selling techniques which are used by companies to
sell its product

Air blue is working on exclusive distribution and giving rights to travel agents
to sell its tickets and these travel agents are certified by IATA.

Strengths
Every organization do SWOT analysis for its company in which strength
show how powerful you are in a fight with your competitors.
Air blue strength is given below:
1. Supreme Market Position
Air blue holds one of the strongest market position because there are more than
one lac passengers that fly through air blue in domestic sector and there are flights
for international sectors such as OMAN, DUBAI, JEDDAH, RIYADH etc. AIR
BLUE is holding this position due to its services on which company depends and
customer believes in their services due to which its product is selling in demand.
2. Brand identification

Air blue had started its business in year2004 and reach a milestone of serving
customer that are more than one lac in just two years that is the reason why
customer want to travel on AIR BLUE rather than on SHAHEEN and PIA. CIVIL
AVIATION AUTHORITY OF PAKISTAN has got least complaints from
passengers about Air blue the reason is Air blue never sacrifice on its services
always remain punctual.
3. Dominant Operating Structure
Air blue has never compromise on its services due to which customer attracts
towards it. Air blue has one type of fleet due to which cost of maintance, flight
operations and other cost are cut off and it utilize latest technology and has
maintain its services as lost carrier from last nine years.
4. Network Presence
Air blue has spread its strong network from domestic to international market as
there are flights for RIYADH, JEDDAH, DUBAI, OMAN and in domestic sector
there are flights in all over Pakistan airports and earning its revenue.
5. Efficient Use of Technology
Air blue has with success incorporated latest technology altogether its systems,
giving it a foothold over competitors. As mentioned within the case study, Air blue
takes credit for introducing most new technologies to the Pakistani market. it had
been the primary carrier in Islamic Republic of Pakistan to include the e-ticketing
system and also the second in South Asia to introduce self register systems at the
solon International airfield urban center. It additionally has associate economical
computer network known as Air Blue EDNET that helps it with success maintain
a paperless setting, providing managers and employees real time access to data.

it's additionally vertically integrated the computer network incorporating major

strategic partners comparable to yank categorical

6. Timely operations
Air blue is 98 percent regular with its operations.
7. Operational planning
Due to use of latest technology by AIR BLUE its operation remain efficient and
effective.
8. Latest Airbus
Air blue uses latest A320-200 and A321-200 with fully latest technology
incorporated in them. There are 7 fleets in which 3 Airbus320-200 and Airbus321200 due to which their cost is reduced and operation remains normal.
9. Position
Air blue has first time introduce self check in at JINNAH international airport due
to which there is ease to passengers who just carry hand baggage to get boarding
pass without going to counter.
10. Blue miles
Air blue provide blue miles services to its customer where you can enjoy free
tickets for domestic sector there are 12000 points are required and for international
sector there are 25000 points are required to enjoy free ticket of both side.

Future Competitive Threats

1. High Interest pace

Air blue always want to excel its business but for Pakistan where there are less jobs
and GDP of Pakistan is going down due to which there is possibility that people
will travel through other means which are less costly such as TRAIN, bus etc. This
will reduce the profit margin of AIR BLUE.
2. Flukily
Air blue has suffered one accident on july28 in 2010 as its plan A321 hit into
MARGALA hills and that was pilot error.
3. Robust opposition
Air blue has strong competition with its rivals like SHAHEEN AIRLINE and
PAKISTAN INTERNATIONAL AIRLINE. Air blue is winning due to its policies
and punctuality and its services that is offered by it to its customers.
4. Value of PAKISTAN rupee
If the value of Pakistan rupees become strong in the international market than AIR
BLUE will enjoy more profit as if it wants to excel its business such as in UK
market and if the value goes down then vice Versa can happen.
5. Shrinking of airline travellers
There are number of factors due to which people can hesitate to travel through
airplane i.e. the attack on world trade center on September 11 and other terrorist
activities can make people think to travel through other carrier.

Tactical ways of LoCost Airlines

MARKET SEGMENTATION:

In Market segmentation we will primarily target those customers who just want to
travel on low cost and our ticket prices will be lower from others therefore
customers will attract towards our airline and in start this thing will not give profit
to our airline but will save us from cost if there are vacant seats remain in flight.
Secondary we will target business man who runs business of their own want
to travel from Lahore to Karachi or Karachi to Lahore or from industrial cities just
like Sialkot or Sukkur.
We will use those routes where there are less flights and our flight operation
will be in Lahore from where we will handle all the system.
We will reach our target by using this strategy and our services will be full for our
customers. They will get premium services in lower price from our competitors
and once our brand image establish than we will increase the prices and then we
will make our customer loyal to our airline by giving higher services, quality food
and comfort because as one dangerous expertise on LoCost airlines can drive
customers back to PIA and Air blue.
LoCost Airlines would have long prided itself on a no flounce low fare flights. This
sort of service, additionally with outstanding client service like e-ticketing and ecargo, can attract primarily families and also the traveller wanting to avoid wasting
some rupees. This demographic segmentation will certainly permit LoCost to
supply their target market the simplest potential service, and prices, by rewardful
being early with an alternative seat. Additionally LoCost targets travel agents,
company travel managers at the side of their individual travelers. B2b market will
be the extended target market of LoCost.

Market Development (Domestic Routes)

A great chance for LoCost airlines, as initial domestic operational airlines

for Asian nation within the Pakistan airlines market is to expand its presence and
extend the route network altogether cities of Pakistan. This can alter the corporate
to draw vast quantity of traffic, knowing that the Pakistani travel market could be a
moneymaking chance.
Cutting of prices
We can cut ticket prices to lower rates if we higher less staff and technology
introduce in the system such as electronic ticketing where customer can book their
ticket online and single type of fleet introduce in the system which will decrease
the cost of flight operation, training and maintance.
Marketing Programs
To make LoCost a brand name you have to work on marketing section.
Advertisement of LoCost will introduce awareness in the mind of customer and
help us to sell our product and for advertisement you just need to provide some TV
commercials and ads in newspaper.

PRODUCTS
LoCost Airlines product is providing economical and low cost travel
between Multan, Lahore, Bahawalpur, Islamabad, Karachi, Faisalabad, Sialkot,
Sukkur, Sakardo, Peshawar, Gilgit and every one airport across Islamic Republic of
Pakistan. The airline methodology is to sell the product to the people who want
cheap fares not the one which PIA is targeting. Our product will be different from
other and our main targets are students and lower economy class people who

dream to travel and we will give our best services and will compete with our rivals
to excel in the market.
PLACE
One of the necessary parts of selling combine is that the place. If we sell ice
in cold place it will just like to suicide so place matter for any product to sell.
LoCost deals in brief flights that could be a best choice for travel domestically
across Islamic Republic of Pakistan. The flight length would be counting on the
route conditions however the typical length of the flight would be of short routes.
This strategy would facilitate our airline to possess tight management over price.
Being the low price airline we'd be targeting the center category and shall give our
best for our customers.

PROMOTION
Promotion is one of the major thing to excel any business. As way as price thinks
about, LoCost would use native newspapers rather than business magazines and
brochures keeping seeable our target market is that class which may simply afford
newspapers rather than big-ticket magazines. The second mode of promotion that
we tend to shall adopt is TV family channels rather than executive director
channels that shall attract individuals from class. As males are more frequent flyer
therefore we'd sponsor sports, second students and families would be our target
market therefore we'd visit schools and universities to market our complete and
that we would play TVCs on family channels.

PRICE
As we tend to see that the core strength of the LoCost airline would be in its low
price. LoCost would conjointly supply a large discount for patrons WHO do
advance ticketing. LoCost wouldn't offers meals throughout flights to their
customers and LoCost would conjointly save cash by not providing coaching to
their workers; LoCost Airlines would attempt to use most seat capability, although
our fairs would be low however our set up would never fly empty
LoCost would conjointly save the value by lowering the turnover quantitative
relation of the employees; LoCost would introduce extremely innovative programs
for workers to stay them motivated and happy. LoCost would have solely ATR
seventy two and every one of their pilots would be certified to fly these aircrafts,
LoCost would not have to offer any coaching to their pilots and what is more
having only 1 single plane conjointly save the value of spare components, since
company would use only 1 sort of plane their spare components and maintenance
price would even be terribly low. This strategy would conjointly facilitate LoCost.
As LoCost would enter the market, fares of other airlines will go down. This action
would begin a price struggle that shall quickly develop into nice edges for patrons.

A low - value strategy

As we are competing against different airlines but we can only excel in the market
by focusing on our low price strategy. Our targets are those people who just want
to travel and if they get tickets at low price with full service in the planes they will
become our loyal customer who will prefer our airline.

DISTRIBUTION

LoCost would favor Zero Level promoting channel and would avoid involving
intermediaries to reduce price. E-Ticketing, E-cargo, ticket-less travel, reservation
on phone calls would all be preferences of LoCost. We definitely would like some
agents to create our market repute which would be our solely cause to use One
Level channel. These measures will reduce the paper cost and if a client would
evoke a written price tag, there would be a surcharge
FINANCIAL set up
In financial setup we will plan that what cost is going to spend in starting the
LoCost airline and both in text and charts there is a brief description of everything.
Secondly this section will give us information about the revenue and cost that is
going to spend on aircrafts and their operations. Cost of Boeing737-300 and
ATR42-300 are involved in it and some dry leasing of recent aircrafts and detail of
our target passengers.
We will start our first flight with only 100 passengers on the short routes and our
fares for ticket will be lower than as expected so that we can in ourselves in the
new market and can give hard time to competitors.
We will use our aircraft maximum at different routes and will follow the strategy of
circular routes rather than hub and spoke that emirates airline use. We will target
the business man who wants to go and come on the same day or in the same week
and crew rest is also considered in this section and their utilization.
We assume that we will reach the mile stone of half million passengers in the very
first year and airline will also start to generate profit in the first year and will carry
on to do so.

Start-up Cost Assumption

Aircraft dry Cost
Fleet: 2 Boeing 737-300
2 ATR 42-300
If purchased, one Boeing 737-300 will cost: Rs. 72,2500000/2 Boeing 737-300 will cost= 2 x 72,2500000= Rs. 1,445000000/Annual dry leasing cost per Boeing 737-300: Rs. 11,5600000/Dry leasing cost of 2 Boeing will be: Rs. 23,1200000/If purchased, one ATR 42-300 will cost: Rs. 17,0000000/2 ATR 42-300 will cost= 2 x 17,0000000= Rs. 34,0000000/Annual dry leasing cost per ATR 42-300 will be: Rs. 2,7200000/Dry leasing cost of 2 ATR 42-300 will be: Rs. 5,4400000/1.5% insurance rate of Boeing 737-300 cost (per aircraft): Rs. 1,0837500/Annual insurance expenses of 2 Boeing 737-300: Rs. 2,1675000/1.5% insurance rate of ATR 42-300 cost (per aircraft): Rs. 25,50000/Annual insurance expenses of 2 ATR 42-300: Rs. 51,00000/Total annual dry cost of all aircrafts: Rs. 31,2375000/-

Crew Cost
Crew per aircraft: 1 captain, 1 flight officer, 1flight engineer, 3 flight attendants

Captains annual salary: Rs. 36,00000/4 aircrafts so 4 captains, then salary cost: Rs. 1,4400000/First officers annual salary 70% of captains: Rs. 25,20000/4first officers so salary cost would be: Rs. 1,0080000/Flight engineers annual salary 50% of captain: Rs. 18,00000/4 flight engineers so salary cost would be: Rs. 72,00000/Flight attendants annual salary 20% of captains: Rs. 7,20000/12 flight attendants, 3 in each aircraft: Rs. 86,40000/Annual cost of incentives including food, medical, life insurance,
transportation, residence expenses: Rs. 2,4000000/-

Total annual crew cost of 4 aircrafts: Rs. 6,4320000/-

Ground Cost

Annual Flight Operation officer salary: Rs. 3,60000/10 FOs Annual Cost: Rs. 3,6000000/Metrology Department instrumentation (First year): Rs. 20,00000/Metrology Department annual salary expenses: Rs. 5,00000/Ground Engineers: Rs. 30,00000/Vehicles if purchased (First Year): Rs. 1,0000000/Vehicles annual lease expenses: Rs. 16,00000/Other annual salary costs including management staff: Rs. 2,4000000/Marketing Department all sales, promotion, placing, distribution,

advertisement campaigns and transportation: Rs. 50,00000/ Offices, outlets, architecture, staff expenses (First Year): Rs. 20,00000/ Annual cost of Incentives of employees including food, transportation,
medical, life insurance: Rs. 3,6000000/Total Ground Cost first (First Year): Rs. 11,8500000/-

Total ground expenses for next years: Rs. 10,4500000/-

Wet Cost of Aircraft

Fuel consumption of Boeing 737-300: 1000 gallons/hour
Fuel Cost of Boeing 737-300: Rs. 2,72850/- for one hour
Fuel consumption of ATR 42-300: 156 gallons/hours
Fuel cost of ATR 42-300: Rs. 1,54440/- for one hour

Prices
Lahore-Karachi
Karachi-Islamabad
Islamabad-Lahore

Rs. 7000/Rs. 9000/Rs. 4500/-

Peshawar-Multan
Multan-Sialkot
Sialkot-Peshawar

Rs. 7000/Rs. 4500/Rs. 4500/-

Note: All prices stated in the table below are in PKR Rs/Performing Assumptions

FY 2016

Aircraft in service

4Boeing

Cost of single aircraft

72,2500000/-

Annual leasing cost per Boeing

11,5600000/-

Cost per ATR if purchased

17,0000000/-

Cost of single ATR yearly

2,7200000/-

Security percentage of plane

1.5percent

Annual insurance cost of 2 Boeings

2,1675000/-

Annual insurance cost of 2 ATR

51,00000/-

Captain's yearly wage

36,00000/-

First Officer's yearly wage percent of

Captain
Flight engineers Annual salary % of
Captain

70%
50%

Flight Attendant's Salary % of Captain

Total crew per aircraft (min.)

20%
Flght-3/Cab-3

Flight Hours/Month for Crew

100

Average Total wage Cost/Hour

15,000/-

Total aircraft maintance. cost/hour

10,000/-

Fuel of Boeing burn gal/hour

Fuel burn of ATR gal/hour

1000
156

Handling cost/passenger (ave.)

400/-

ATC section average

12,000/-

Land/depart charge per section average

15,000/-

Parking fee/aircraft/night

15,000/-

Average reservations cost/pax/seg

Average section (hours)
Annual sections

200
1
4,000

Average total capacity/section passengers

110

Average yearly Load Factor (%)

50%

Average fare per passenger/section

Cargo per section (kgs)
Average cargo tariff per section/kg.

7,000/1,000
30

Average cargo tariff per section

30,000/-

Average passenger revenues/section

7,70000/-

Average cargo revenues/section

30,000/-

Percent/revenues commissionable

40%

Commission payable

10%

Total average revenues/section

8,00000/-

Total average costs/section

6,10216/-

Total average net yield/section

1,89784/-

Total revenues/year

3,200000000/-

Total operating costs/annually

2,440864000/-

Total net operating revenues/annually

7,591360000/-

REFRENCE:
(2016, June 18). Retrieved from
https://www.ukessays.com/essays/management/strategic-analysis-ofpakistan-international-airlines-management-essay.php
CAA data: Travellers register growth, highest in three years - The Express Tribune.
(2014). Retrieved from The Express Tribune:
http://tribune.com.pk/story/777912/caa-data-travellers-register-growthhighest-in-three-years/
Pakistan International Airlines - Great People to Fly With. (2016, June 18). Retrieved
from Piac.com.pk: http://www.piac.com.pk/
PIA Project. (2016, June 18). Retrieved from Slideshare.net:
http://www.slideshare.net/fahaducp/pia-project.
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https://www.scribd.com/doc/78931626/PIA-Quantitative-and-Quality-Analysis
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https://www.scribd.com/doc/30062402/Report-On-The-Management-Of-P-I-A

https://www.airblue.com/
https://en.wikipedia.org/wiki/Airblue
http://www.bplans.com/airline_business_plan/company_summary_fc.php
https://www.quora.com/How-much-will-it-cost-me-to-build-a-complete-airline-company